Auburn Regional Medical Center has leased from Auburn Ace Holdings, LLC, the vacant Cavanaugh half block for use during construction of its Medical Office Building and Oncology Center on North Division and Second Street Northwest.

Last week ARMC turned the grassy block between South Division and A Street Southeast into a temporary parking lot for 105 vehicles belonging to hospital and construction staff.

“It’s a one-year lease for the parking lot,” owner Pat Cavanaugh said Tuesday. “And if for some reason our property sells, there’s a 30-day out-clause for either party.”

The lease allows for an extension should the hospital require use of the block any longer than the one year.

The 43,305-square-foot, three-story, medical official building and cancer center the hospital is building one block to the northwest will be the second phase of a two-phase project. The hospital began construction on the contiguous 300-plus stall parking garage last fall. The city and ARMC will share the garage. The medical office building’s main entrance will face North Division Street.

“You’ll see the garage go up first, but the medical office building will catch up, so the goal is to have them completed at the same time,” Doug Brimhall of Ensemble Real Estate Services said last July during the groundbreaking on the garage.

Ensemble is developing the project on behalf of ARMC’s parent company, Universal Health Services. The builder of the parking garage and the medical facility is Seattle-based BNN Builders, Inc.

The vacant Cavanaugh half block was to be the home of Project Ace, a never-built five-story hotel, water park condominium and retail project. But financial machinations of the Cavanaugh’s development partner, Ben Errez, helped kill the project.

In early 2008, Cavanaugh won a $2.4 million interim award in arbitration against Errez and his Plan B Development.